tv Nightly Business Report PBS June 24, 2016 6:30pm-7:01pm PDT
this is "nightly business report" with tyler mathisen and sue herera the british people have voted to leave the european union and their will must be >> i believe we now have a glorious opportunity. >> i would go back to the polling station and vote to stay. simply because this morning the reality is actually hitting in. stocks plunge the, investors stunned. future of europe and the global economy now uncertain. >> what britain's historic vote means for your investments and your money tonight on "nightly business report" for friday, june t
>> good evening. i'm sharon epperson in for sue herera. >> i'm bill griffith in for tyler mathisen coming to you this evening from the new york stock exchange where stocks were battered today by the united kingdom's unprecedented decision to leave the european union. government bond yields plunged today. oil prices cratered. the financial sector especially had its worst day since 2011 as the global markets entered a tailspin. when all was said and done the dow jones industrial average lost 611 points, 17,399. its eighth largest point loss ever. the nasdaq fell by more than 200 points. the s&p 500 dropped 76. the s&p now negative for the year, sharon. >> we have three reports tonight from around the world. we're going to start with wilford frost in london. >> reporter: britain has voted
to leave the european union. the final results, 52% to leave, 48% to remain. a surprise outcome on almost any time horizon, especially compared to 24 hours ago. when pollsters, betting markets and financial markets were all united in expecting a vote to remain. the results therefore this morning unsurprisingly tumultuous. the pound briefly hitting a 30-year low. european equity markets closing sharply lower. as did u.s. equity markets. the dow down some 610 points. the reaction in financial markets unequivocally negative. for people on the streets it was more mixed. >> i think it's a very, very sad and stark thing. not just for britain but for humanity. in general. it's just unwound many, many decades of hard work by a lot of people, not just in the uk but all over europe.
>> it's the vote for democracy, it's a vote for freedom. i think it's going to have huge implications right the way across europe. >> i don't think it affects us too much to be honest with you. i think the euro is falling altogether, i think we're better off without it, to be fair. i think a lot more other european countries will follow suit. >> i just worry that there's going to be a lot of anger and division in the months and the years ahead. >> we have referendums in place for a reason like this. that's why -- i think look as for politicians the best. a big surprise for the british prime minister david cameron who delivered the referendum in the first place. he has been forced to resign but will stay in his post until the autumn. a massive vote for the future of the united kingdom and the european union as well with repercussions around the world. for "nightly business report" in london, i'm wilfred frost.
we head over to the cap actively the european union, brussels, and a report from julia chatterly. >> reporter: it turned into a beautiful afternoon here in brussels in the heart of europe. but i think that belies the underlying shock, the underlying trauma of the results of this uk vote. i don't think anybody here really expected uk voters to decide to leave the eu. and i think that message was clear when angela merkel, chancellor of germany, spoke earlier. she said she deeply regrets uk voters' decisions but more importantly she said we need to assess the situation calmly and not make any instant decisions. i think forecast that with what we got from some of the looet leaders of the eu institutions. jean claude junker maintaining the line, out is out and there will be no renegotiati. >> renegotiation swiftly, swiftly, with uk.
we got terms and conditions of its withdrawal from the european union. >> reporter: you could make the point that he perhaps wasn't talking as much to the uk as he was to other eu nations and those with populist parties that perhaps could look at this vote and say, hey, why don't we talk about having our own referendum on eu membership? then again, you look at the moves we saw in the markets and perhaps that's enough of a pause for thought for some of these countries, particularly the moods in the eurozone banks, given what we know, the eurozone economy still struggling with high debt and the banks still need work. for now we wait and see what happens as far as future negotiations between the uk and the eu. for "nightly business report," i'm julia chatterly in bru finally, reaction overnight in beijing. eunice yun reports. >> reporter: investors in asia were caught off guard by the brexit outcome. tokyo was the biggest casualty,
the nikkei dropped by nearly 8% as investors scrambled into safe haven assets, pushing up the yen, which in turn hurt exporter stocks. shanghai suffered less because it's a largely isolated market. throughout the region policymakers are trying to calm the markets. in japan the finance minister said the government would make sure the jittery yen movements don't continue, though he stopped short of talking about an intervention. in china, where the yuan hit a five-year low, concerns are growing that the yuan could face further pressure from a stronger dollar. the stroll bank said it aimed to stabilize the exchange rate what they called a reasonable and balanced level. beijing officials said they were hoping for calmer times. >> we hope that the uk and europe can reach a consensus after relevant negotiaib >> reporter: also in china i caught up with the indian finance minister who said he believed that the impact of brexit on the markets would be short-lived. >> as the situation proceeds
further, it will settle down. after all, it's going to be the same uk and the same european union. except that you'll have to treat with them separately. >> reporter: research firm capital economics points out experts to the uk are equivalent to 0.7% of gdp for the region as a whole. cambodia, vietnam, and hong kong could be affected but the firm says otherwise the impact on asia's economy because of brexit could be limited. for "nightly business report," i'm eunice yun in beijing. after today's steep plunge in the stock markets, what happens next? bob pisani takes a look for us tonight. >> reporter: we ended near the lows for the day on the biggest volume day of the year. most large stocks down 3% or more. could have been worse. the rebounds occurred at the close but it was orderly and it did not appear to impact stock prices. so what's next? we're back where we've been many times on either side of 2150 in the s&p 500. we've pivoted in and out of that
point for over a year. the key question for investors is, what's the impact on earnings? many big global companies get 20% or more of their sales from europe. there's three areas of potential impact that's concerning investors today. first an economic slow-down could reduce capital spending as companies simply buy less technology, buy less office supplies. second, lower consumer spending over there might hurt consumer stocks like retailers, for example. finally, a stronger dollar might reduce commodity prices and reduce earnings for energy, materials, and even big global industrials. most analysts believe that earnings will turn positive in the second half of the year as stable oil helps energy companies and the slowly improving u.s. economy helps boost sales. but a slower europe could turn a positive second half scenario into a negative scenario. and no wonder since there was a sell-off. for "nightly business report,"
i'm bob pisani at the new york stock exchange. there is so much to talk about. let's turn to our two guests for more on what the uk vote to leave the european ion will mean for the u.s. stock market in the days and weeks ahead. we have financial journalist ron esana and john manly, chief investment strategist at wells fargo. ron, when you look at what happened today, big down day, but for the week domestic and foreign stocks not as badly hit. some financial advisers saying maybe for long-term investors this is not as much of an issue. are they being overly optimistic, as they were when they thought we'd have a remain vote? >> that's part of the problem. the reason the market weekly did so well is investors bought shares of european stocks and bought shares in the u.s. in anticipation that the uk would stay. you had a run-up in the market, then a big drop. so when you net it out it wasn't as cataclysmic as suggested. i don't think this is going to be over as soon as some others might.
this is a long-term process that the uk has begun. it could lead to further unraveling of the european union. i think there's a lot of risk out there. morselling to co-- more sellingo come. i don't think we've hit bottom yet. 10, 20 years you'll find stocks you like at bargain prices so you'll buy those. but this is going to be a market event for some time to come. >> john, what do you think? individual investors have to be asking themselves what do i do now? s should i buy this dip as was popular since the market bottom in 2009? would you be i woubuying this d? >> i was with ron until he got to 10 to 20 years, i don't think it will take that long. we have to go through vuchlt. the market got sucker punched. we thought it was going to be okay, all of a sudden it's not okay. so we have to adjust to that. we still don't know what exactly is going to happen. one of the big positives is that the market is so cranky. we have a way of acting up when
we don't like things so we definitely pass along the message. that happened with t.a.r.p. i have a feeling everyone's going to be at the top of their game as they try to negotiate how the uk and eu interact. >> a lot of investors want specifications. a great many notes from financial advisers and investment strategists saying, broader diversification, adequate cash reserves, bond reserves, you'll be fine. what does that mean exactly? how do you diversify in light of this? >> i'm not so sure there's any way you can diversify around this. it's a surprise. the future sometimes surprises us. many times you don't have to predict the future well to do do well in the stock market this time you had to. let the market settle, it has a way of taking care of itself. good corporations, the ones you want to own long-term, they're very good at adjusting. governments can have all sorts of agreements between or amongst each other how they trade and i don't think that's been taken into account. let it settle, look for opportunities, find things you want to buy, when they hit the
points, if they hit the points, take advantage. >> one standout investment that did very well today was gold. a lot of people can't decide whether that's a risk asset anymore or a hedge against inflation or geopolitical concerns. would you be looking to gold right now? >> i think -- gold, from a technical perspective, first hit a target that i think a lot of people were watching, 1315 an mountains. in dollar terms if the dollar continues to appreciate i'd be loathe to buy gold. i'd be buying other currencies. if you're a british investor i do might be buying gold. if there's risk the european union dissolves and we start to see individual currencies popping up on the continent, they're going to want to buy gold as a hedge as well. think in today's action, this is really a response to not only the uncertainty that was created from this event but you have negative interest rates around the world that make the cost of owning gold considerably less than it's been in quite some time. so in that regard it remains i think relatively attractive. >> all right. thank you, ron and john, wells
fargo, more to come for sure. the federal reserve says it is prepared to add dollar liquidity in the global financial markets if it is needed. and the uk vote will almost certainly change the central bank's thinking on rate hikes in the future. steve liesman has more for us tonight. >> rep brexit vote having profound effect on the outlook for u.s. economic growth and interest rate policy from federaare. a fed that was seen hiking in july or em seen on hold until at least the fall. markets are pricing and even a small chance of the fed's next move could be a rate cut. around the world there's speculation other central banks might look for ways to stimulate their economies. the reason for the change in the u.s. is that the growth outlook now being revised downward. wall street economists cut their forecast for u.s. growth in the wake of the brexit vote. they pointed to a stronger dollar hurting u.s. exports and moving the fed further away from its 2% inflation goal. a big hit to the economy could come from a confidence shock point of concern that brexit
might be the leading edge of more departures from the european union. businesses could be less likely to hire and invest. consumers could be less likely to spend. it will be months before the fed can gauge the magnitude of these effectses. so the fed should be on hold until the considerable fallout of the brexit vote can be counted. one of the most immediate effects on americans is the change in mortgage rates. as investors seek safety in government bonds, yields fall and mortgage rates follow. as diana olick reports, it's a bright spot, at least for homeowners and buyer >> reporter: before most americans got out of their beds this morning, home ownership got a little bit cheaper thanks to brexit. as the bond yields that mortgage rates follow fell. >> from the mortgage side it's positive. consumers and lenders are going to be busy. supply and demand will be happening. >> reporter: the average rate on the 30-year fixed mortgage which was already lower than a year ago fell further.
these low rates contributed to stronger spring sales as buyers faced higher prices. this was an unexpected boost as most thought rates would move high where the federal reserve raised its rates at the end of last year. now even lower rates could spur more refinances. thousands of borrowers gained significant home equity this year thanks to rising home values and they may opt to tap it. lower rates certainly don't favor lenders but they can't exactly turn away from their borrowers. after all, lenders have to lend in order to profit. >> the more likely scenario is that what we'll see is more and more aversion to risk in the loans they do make. so i think we'll continue to see lending. i think we'll probably see more lending in the mortgage industry by non-bank lenders than by the retail banks. >> reporter: a trend that is already well under way. for "nightly business report," i'm diana olick in washin. and still ahead, an intriguing question being asked
today. ?ill america follow britain in donald trump was in scotland for a business trip to one of his golf courses today, and while he was there the presumptive republican presidential nominee praised the dramatic rejection of the political establishment in britain. and he compared it to his own rise in u.s. politics. hadley gamble was there. >> reporter: with the uk's decision to leave the eu royaling global markets and leaving governments in turmoil,
donald trump had a clear message for the people of the uk -- brexit, he says, is great. >> i love to see people take their country back. and that's really what's happening in the united states. and i think you see that. and that's what's happening in many other places in the world. they're tired of it. they want to take their countries back. >> reporter: arriving in scotland for the reopening of his turnberry golf resort, mr. trump didn't seem that worried how brexit is going to impact global markets or his own business. >> if the pound goes down they're going to do more business. when the pound goes down, more people are coming to turnberry. the pound has gone down and let's see what the impact is. i think places like scotland, england, different places in great britain, i think you're going to see a lot of activity. >> reporter: aside from questions about just how this is going to impact the global economy, there are geopolitical concerns as well. one of which of course is just how brexit is going to impact america's relationship with the european union and how that's going to impact the situation with russia. >> i know how he's been scorned
by certain -- to a certain extent. certainly he's not a person that likes our president very much and our president doesn't like him very much. he said some very nice things about me. i think he probably is somewhat of a beneficiary. >> reporter: now while this was the first trip abroad for the republican presumptive nominee, he said this wasn't about politics, it was all about business. but that didn't keep him from taking political pot shots at the president and hillary clinton. >> he came in and really tried to convince people to stay. and i thought it was inappropriate. then she doubled down and did the same thing. and obviously for the 219th time, they were wrong. >> reporter: for "nightly business report", i'm hadley gamble. >> some say that britain's rejection of the european union and the political establishment could bode well for donald trump's presidential campaign. eamon javers is following that story from washington. eamon, trump says the exit vote is a model for his campaign.
how do you think this plays into his chances this novem >> reporter: obviously donald trump from the clips you saw there thinks this plays very well into his chances in november. he in many ways is appealing to a similar constituency here in the united states. an anti-free trade, anti-immigration constituency that's worried about the future of their country. fearing this immigration push that we've seen in the wake of isis terrorist attacks in brussels and paris. this sort of fear factor that donald trump has based his campaign on. that may play out in november here in the united states. the question is, are the political dynamics here as similar to what they are in england as donald trump thinks they are? >> president obama also spoke today about the uk vote. what did he say? >> the with the said that he expected an orderly transition. he called david cameron today. he called angela merkel in germany. the president sounded a little bit disappointed, a little bit downbeat in his remarks today. obviously to some extent this is a personal rebuke for obama as
well because as trump just pointed out in that clip, the president did go to england, he did campaign for the remain side, he wrote an op ed in "the london telegraph" on april 23rd urging british voters to vote to stay inside the european union, praising the european union as something that's brought stability and peace for a generation to europe. that side was trounced in the vote. so the president feels the sting today. >> eight eamon javers with the view from washington, thanks. finish line sprints higher on a day where seemingly everything else was red. that's where we begin "market focus." earnings at the athletic shoe retailer beat estimates despite dropping 30%. revenue rose thanks to what the ceo called explosive growth in the company's adidas business. shares of business line soared over 21% to 21.45. analysts at brg are bearish on at&t. the firm downgraded its rating on the telecommunications giant
to neutral from buy saying the company is fundamentally healthy but it doesn't see much more room for shares to run. at&t down nearly 1% to 41.52. meantime, medtronic is raising its quarterly dividend by 13% to 43 cents per share. the yield on that stock is 1.8%. and this hike marks the 39th street year that the medical technology company has indeed raised its dividend. shares of medtronic fell nearly 3% with the rest of the market today to close at 83.28. and a delaware judge says that energy transfer equity can legally end its $38 billion merger agreement with rival williams companies. ete entered takeover talks with williams over a year ago but cited a tax problem in march that would prohibit it from finalizing the deal. williams is expected to appeal this latest ruling. shares of williams down 2%
closing at 21.29. energy transfer shares fell more than 3% to close at 13.83. and coming up, from newer retirement accounts to other investments, how can you protect your money from the brexit fallout? every friday our market monitor guest recommends stocks to buy. tonight in light of the news, you can find mike bailey with fb capital partner stocks. his picks are permanently on our website, nbr.com. he calls them three ideas for an
uncertain market. >> what will all this uncertainty about the future of europe and the global economy mean for you and your money? our next guest manages money for individual investors, tim mower, director of personal finance at vam alliance, good to have you on the program. one of the things that you've brought up is it's very important for people to understand what this brexit vote means because 48 hours ago many folks probably didn't think it meant anything for them. so now they see the headline. what should they do? >> you're absolutely right, sharon. being educated on whatever it is that's happening, that's having an impact on the market, will decrease your stress. one of the things you will find as you dig into this is, this is the type of political event that is going to happen cyclicly, over and over again. it always does and often it has impact on the market. fortunately for most retirees or future retirees it shouldn't have much of an impact on them
personally. >> i had a friend last night message me. he recently retired, getting income from his 401(k) plan, he's very worried this could impact that. you seem to be suggesting they should be not concerned. what do you say to those analysts who say this is going to drag on, this problem, for a few years now? >> here's what i suggest you tell your friend. if that individual has a good diversified portfolio, i'm sure he does have some exposure to equities because over time that's going to help him outpace inflation. but it's not the equities that he should be looking for today's income from. that should be provided by his fixed income exposure, his cash. the equities are what is going to provide him with income many years in the future. so i try and help retirees look at it. if somebody's in retirement, i totally understand that stress. look at the fixed income portion of your portfolio as what's providing you income today and the equity portion of your portfolio, what's going to provide you with income in the future. >> what about those who are
putting money into a 401(k) or an ira? it's now the time to take that money out or put more money in, and why? >> ultimately you're going to put the same amount in regardless. by all means, if this motivates someone to put more in their retirement account, i'm all for it. but i'll tell you this much, when it comes to people who are going to be retiring in the future, by the time you actually need this money, you won't even remember the term "brexit." >> finally, i keep asking people. we see what gold did. it's going to get people's attention. do you put gold in that diversified portfolio you've >> i don't mind seeing a tiny bit in precious metals but the truth is gold is not as much of an investment as it is a pure commodity. you're going to se go up on a day like today. any time the fear factor goes up gold may go with it. at best gold is a hedge. i don't recommend it as a long-term investment. >> all right, always sage advice, tim mower with vam
alliance, thank you. here's another look at the post-brexit sell-off on wall street this friday. the dow lost 611 points today. that's about the low for the session. the nasdaq fell by 202 points. and the s&p 500 dropped by stick. the s&p by the way is now negative for the year. and that is "nightly business report" for tonight. i'm sharon epperson. thanks so much for watching. >> and i'm bill griffeth. have a great weekend, everybody. we'll see you again on m
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